Correlation Between Global Li-Ion and American Manganese

Can any of the company-specific risk be diversified away by investing in both Global Li-Ion and American Manganese at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global Li-Ion and American Manganese into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Li Ion Graphite and American Manganese, you can compare the effects of market volatilities on Global Li-Ion and American Manganese and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global Li-Ion with a short position of American Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Li-Ion and American Manganese.

Diversification Opportunities for Global Li-Ion and American Manganese

-0.36

Correlation Coefficient

Global Li-Ion  American Manganese

Very good diversification

The 3 months correlation between Global and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Global Li Ion Graphite and American Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Manganese and Global Li-Ion is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global Li Ion Graphite are associated (or correlated) with American Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Manganese has no effect on the direction of Global Li-Ion i.e., Global Li-Ion and American Manganese go up and down completely randomly.

Pair Corralation between Global Li-Ion and American Manganese

Assuming the 90 days horizon Global Li-Ion is expected to generate 1.49 times less return on investment than American Manganese. In addition to that, Global Li-Ion is 1.92 times more volatile than American Manganese. It trades about 0.06 of its total potential returns per unit of risk. American Manganese is currently generating about 0.16 per unit of volatility. If you would invest  6.30  in American Manganese on September 5, 2024 and sell it today you would earn a total of  1.80  from holding American Manganese or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Global Li Ion Graphite  vs.  American Manganese

Global Li Ion

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Li Ion Graphite are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Global Li-Ion reported solid returns over the last few months and may actually be approaching a breakup point.

American Manganese

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Manganese has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, American Manganese is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Li-Ion and American Manganese

The main advantage of trading using opposite Global Li-Ion and American Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Li-Ion position performs unexpectedly, American Manganese can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American Manganese will offset losses from the drop in American Manganese's long position.

The idea behind Global Li Ion Graphite and American Manganese pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..